Rio Grande LNG says Trump exec order will end their legal woes

Two LNG companies in south Texas, Rio Grande LNG and Texas LNG, say that a series of executive orders issued by President Trump should remove a legal cloud that has cast a shadow over their projects and threatens to stall development.

Despite the expected environmental damage from the gas export terminals, the two LNG developers are now arguing in court that the consequences of their pollution no longer matter — citing executive orders from President Trump. The case is being closely watched by the broader U.S. LNG industry.

In August 2024, the U.S. Court of Appeals for the D.C. Circuit rescinded federal authorisations for the two gas export terminals — Rio Grande LNG and Texas LNG — located near the U.S.-Mexico border. In that decision, the court said that the Federal Energy Regulatory Commission (FERC) did not adequately study the pollution impacts on low-income communities nearby in the town of Port Isabel, Texas.

LNG terminals emit large amounts of toxic air pollution as well as greenhouse gas emissions, and the court said that FERC needs to conduct a deeper analysis and revisit the permit application.

The decision was a major setback for both LNG projects, although the full extent of the impact remains unclear. The damage could range from a minor speed bump to a significant delay of months or even a year or longer. In a worst-case scenario, the authorisations would remain blocked, potentially derailing the projects altogether, although industry analysts see that as a less likely scenario.

But the LNG developers believe that the election of Donald Trump was a pivotal moment for their projects. In a January 23 filing to the D.C. Circuit Court, Rio Grande LNG argues that the court’s concerns are effectively moot, following two executive orders issued by President Trump on his first day in office. Texas LNG submitted a similar filing on the same day.

One of Trump’s orders revoked a prior order by President Bill Clinton in 1994, which directed agencies to identify and address environmental justice concerns in their programmes. Because President Trump now says the government no longer has to consider environmental justice, FERC shouldn’t have to consider those factors when evaluating the LNG projects, Rio Grande LNG argued. 

It’s not that the pollution won’t damage communities in south Texas, it’s that the pollution no longer legally matters, the companies argued.

“Following the January 21 [executive order], it is now clear that all of the claimed errors cited by the panel here as the basis for vacatur are based on authorities that are now without force,” Rio Grande LNG wrote. “As a result, they cannot be a proper basis for vacating FERC’s authorization of the Rio Grande project and requiring a supplemental [environmental impact statement] based on purported deficiencies in an environmental justice analysis.”

NextDecade, the developer of Rio Grande LNG, did not respond to questions from Gas Outlook.

The case has significant ramifications beyond south Texas. The August 2024 decision revoking the construction authorisation for Rio Grande LNG and Texas LNG “will likely have a chilling effect on the entire U.S. LNG market, as underwriting new projects – either via off-take or capital gets riskier and more expensive,” equity research firm Webber wrote at the time.

Industry analysts see the decision against Rio Grande LNG as injecting uncertainty into many other LNG projects, which have to make a case to investors to loan them money for multi-billion dollar projects. The Rio Grande saga shows that even when projects have their permits in hand, a federal court can send them back to the drawing board.

“Unless it’s self-funded…we think any new project or expansion in the U.S. may be in a holding pattern until this is resolved and the uncertainty created around the regulatory process is eased,” Webber wrote last summer.

Rio Grande LNG and Texas LNG are hoping that Trump can clear up their legal woes.

He is certainly trying. The Trump administration is in the midst of an unprecedented and, in many ways, illegal campaign to gut the U.S. government. That includes a large-scale effort to force federal workers out of government and an effort to kill an entire federal agency, a move widely seen by legal experts as plainly unlawful. While it has received less attention, Trump also ordered the shuttering of offices at the Environmental Protection Agency, including ones dealing with environmental justice. Some fear mass layoffs are next.

A top Trump priority is to increase LNG exports. But it remains unclear whether his authority extends to the legal challenges against a range of LNG projects now working their way through the courts. In addition to Rio Grande LNG, a handful of other high-profile projects have also suffered setbacks, including Venture Global’s CP2 project and Commonwealth LNG, both located in southwest Louisiana.

Opponents of Rio Grande LNG say that Trump’s executive orders don’t actually change anything, and that Rio Grande LNG and Texas LNG should not move forward.

“Our position has always been, and still is, that these projects are unneeded, will harm surrounding communities, will harm the regions where gas is produced, and will harm the climate, such that FERC should find that the projects are contrary to the public interest for purposes of the Natural Gas Act,” Nathan Matthews, a senior attorney at the Sierra Club, who is involved in litigation against Rio Grande LNG, told Gas Outlook.

Matthews added that presidential executive orders “cannot override” laws. The Natural Gas Act requires the federal government to determine whether or not LNG projects are in the “public interest.”

“We do not believe the executive orders change any of that,” he said.